On 4 May the Australian Business Association of Cambodia held a seminar to educate local businesses about the ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA). Two visiting officials from Australia’s Department of Foreign Affairs and Trade, Ms Jenni McEwin and Ms Connie Lo, highlighted Australia’s already strong ties to the ASEAN region, as well as the benefits of the new agreement for exporters and importers.
The agreement covers an area with a combined population of 600 million and an estimated gross domestic product of $2.7 trillion. From July 2009 to June 2010, trade between Australia and ASEAN totalled about US$78 billion, up from $43.8 billion in the same period from 2000 to 2001.
In the 2009-2010 period two-way trade between Cambodia and Australia accounted for $58 million of the total trade between Australia and ASEAN countries. Ms McEwin emphasised the potential of the agreement to increase bilateral trade and investment between Australia and Cambodia, noting that the agreement would ensure good market access for Cambodian exporters into the Australian and New Zealand markets.
The benefits of AANZFTA include reduced tariffs on the import and export of goods and updated rules of origin, as well as investor protections, a framework for business-entry provisions and assistance in implementing the agreement.
The updated rules of origin benefit Cambodia in that they provide for many goods produced in Cambodia, such as garments, to face reduced tariffs even if the raw materials were imported from elsewhere. This has the potential to create more investment opportunities in areas such as manufacturing.
During the seminar Mr David Carter, the Chief Executive Officer of Infinity Insurance and President of the Australian Business Association of Cambodia, said the agreement would help provide security for investors looking to put their money into Cambodia.
Whereas they once had little recourse if their Cambodian partners reneged on a deal, according to Mr Carter, the new agreement now offered investors much-needed avenues for arbitration, including through third countries.
“If you can bring confidence about Cambodia to a group of investors, they’re more likely to come in,” he said.